The overall goal of this proposal is to understand how pancreatic progenitors are produced from undifferentiated endoderm during embryonic development. Our rationale is that this information will be invaluable to efforts to differentiate human stem cells into -cells and other pancreatic cell types in vitro, for use in transplantation therapies for diabetic patients. Our strategy is to exploit the zebrafish as a powerful vertebrate model to study the earliest steps in the process of normal pancreas development. We propose three Specific Aims, which build upon our previous work, and exploit a novel cell transplantation technique that allows us to test germ-layer specific gene function. In work published during the previous funding period, we used this approach to establish that the signaling molecule Retinoic Acid (RA) is an instructive mesoderm-derived positive regulator of pancreas development, which acts directly on endoderm to specify the foregut region. By contrast, we showed that transcription factor Cdx4 is a negative regulator of pancreas development, which functions within posterior endoderm to set the posterior limit of the pancreas. In preliminary experiments we have used microarray analysis to identify endodermal targets of RA signaling. Intriguingly, these targets include molecules able to negatively-regulate RA signaling, as well as transcription factors, including Hox gene products, likely to function downstream of RA to specify pancreatic progenitors. In Aim 1 we will test the hypothesis that Cyp26 and Nr2f negative-regulators of RA-signaling function to regulate regionalization of endoderm to foregut by controlling the precise size of the RA signaling domain. These experiments will make use of pharmacological inhibitors, zebrafish mutant analyses, morpholino-knockdown of gene function, and germ-layer specific cell transplantation. In Aim 2 we will test the hypothesis that RA and Cdx4 positively regulate expression of endodermal Hox transcription factors that function to promote or block pancreas development, respectively. We will identify RA and Cdx4 regulated Hox genes, then use gain and loss-of-function approaches coupled with germ-layer specific cell transplantation to test their roles in endoderm regionalization. In Aim 3 we will investigate the roles of two additional candidate RA-targets previously implicated in early pancreas development: the Hb9 and Tcf2 transcription factors. We will use mutant analysis and morpholino-knockdown to test the hypothesis that these transcription factors specify distinct subsets of endocrine pancreas cell types. Finally, we will investigate how Hox genes, Hb9 and Tcf2 interact within the transcription factor network that functions downstream of RA to specify pancreatic cell types. The proposed experiments will provide novel information relevant to the manipulation of pancreas cell types in vitro. In addition, this work will provide new insights into the regulation of the RA signaling pathway, which is critical for many different developmental and physiological processes.